Bitcoin Forum

Clearly the current situation for GOX is the biggest threat they've ever experienced, the primary problem being massive loss of trust.  However, under the circumstances, there is a very simple way for them to quickly reestablish trust and hasten their full recovery.  All they need to do is:

Ensure (via low withdrawal limits) that a "run" on mtgox cannot quickly occur.  The moment people realize they can successfully withdraw even a small amount from GOX and sell at a higher price somewhere else (arbitrage), GOX will see healthy deposits, their price will quickly rebound and all will be as it was.  MTGOX returns again.  Not a surprise. They've done it before.


I'll send BTCitcoin to anyone who can provide clear reason this isn't possible.

Look at the Ask side http://bitcoinity.org/markets The moment people start to buy the price will rush up to the level that sellers are willing to sell. Unless you already have BTC or fiat and withdraw that, you're very unlikely to be the very few who get the advantage you suggest. It does seem that there are 13k BTC for sell below the level of other exchanges but I'm not sure the data is reality at the moment.

Perhaps there's an opportunity if people have setup sells at a loss just to get out of MtGox but that difference could easily snap shut when they do sort out their problems. The tough problems might be if someone has tried to make undoing the errors hard by creating circular references of unconfirmed transactions, some of which are not valid. Good luck to them but they've landed themselves in a fix AND not done well communicating the real problem. I suspect then they have suffered a problem for a while and undoing it perhaps suggests they've lost money to whoever was scamming them with that bug in their software. The risk then until confirmed is that MtGox might not have the BTC and fiat to honor all withdrawals. I'd like to see them survive and thrive but it isn't looking good from the little we see atm.

Limiting withdrawals might work, so long as internal transfers to new accounts doesn't cause a problem. Restoring faith will require a clear message about what's occurred and a working exchange that turns over withdrawals within limit in a timely fashion.

I'm afraid that the reason is that MTgox has lost the trust of all his clients, by limiting withdrawals and trying to control and manipulate the market.
Whoever who has anything on MTGox would like to have their $ and BTC back as soon as possible.
If they give the possibility to the customers to withdraw freely their money in both directions ($ and BTC) without any limit maybe, I say maybe, they will save their business from closing.
But their problem is that they want to hold their predominant position on the market treating in very bad manner their clients: locking their money, non answering the support tickets ect
If they do in this way it's the end for them.
If they don't do in this way, probably it's too late as well, but there is some hope for them: if they immediately open all withdrawals, and solve all the tickets in a positive way, they may still save some little quantity of a very conservative clients they have, and than they'll have to build slowly the trust among other potential clients, by acting in a very serious way.
But this means that they have to accept being a 5th exchanger by now and than slowly growing again.
And as far as I understand, this way is out of question for them, because they want to hold their predominant position, which they already lost because of their ambiguous attitude.

Here is my BTC address, if you feel satisfied by my answer: 1PNxQVbtonv6Jhhm5m3N6Xvdkmy5VZ6Gn8

What you suggest isn't possible, at least for a "full recovery" as you stated, because this does nothing to solve the problem of owing their customers as much as 68,000 BTC by some estimates.  Setting low withdrawal limits doesn't do much good if any number of coins requested for withdrawal are owed to others first.  As long as Gox owes ridiculous sums of money, there will always be jammed-up withdrawal requests.

I think that's right.. the function of an exchange is a simple one and when it works, it's fluid. If they can evidence that the exchange now works, then that might restore confidence in their ability to action that simple function. I'm not sure people need to be loyal to any exchange, they just need one that works. There are enough new customers heading into Bitcoin that being an exchange that can roll with it, might turn out well. The only difficulty with this then, is whether they can risk that - whether they can honor all withdrawals; if it ceases up again, that would be fatal - certainly for the perception of current Bitcoiners.

The second point there is impt too. They need to act in the spirit of what Bitcoin is and not like ye olde banking industry.

I disagree. The market has spoken, MTGOX is dying and insolvent by people's view of MTGOX's recent announcements and actions by their CEO on video to not even try to work with someone who flew half way around the world to talk to him face to face.

Trust can not be reestablished that way!
If they want trust they should let everyone withdraw everything they want from them!
And that would be loosing like 400k customers or more!

And Mark wants his frappuccino hot! How can he buy more frappuccino if he gives all his money to mtgox members?

Longterm trust is going to be an ongoing issue yes.  When GOX's prices and services are reasonably close in value to other exchanges why would you stay with them when peace of mind has been so lacking in the past? Well you probably won't.  But people don't need trust if they gain something. People who don't trust non organic food growers, but they still buy their food.  People who don't trust the oil industry could ride a bike, but they still buy gas.  Sooo...

In the short term, after you've withdrawn your limit and are waiting to withdraw more, people will realize there is working "buy low GOX/sell high elsewhere" scenario happening. then...

> When people buy the price will rise.
> When the price is high, due to trust issues, people will sell & the price will drop.
> When their price drops people will buy & the cycle will repeat.

Just ideas and opinions so far.  Of course these don't make my theory impossible. Successful people build their careers on proving ideas and opinions wrong :) Give me something solid that's not open for debate. Such as, its actually illegal, or mathematically impossible, etc. 

Because getting validation is a pain and those who have it might hesitate going through that with another exchange when MtGox is sat there ready to action.

I gave you a good reason why it's impossible.  Gox is reported to owe as many as 68,000 BTC, and your proposed solution does nothing to erase that debt.  You can't just set a withdrawal limit when a withdrawal of any amount is already owed to someone else.  What Gox needs is a solution to pull them out of debt, not just to get people who will never be able to withdraw their deposit trading again.

:)  It's odd but true that people often won't get off their butts and get something done simply because it's inconvenient.

I think that the biggest error of MTGox is trying to limit their customers.
Imagine that you walk into a shop to buy something and once you've paid your money, the owner of the shop don't give you the change inventing excuses, in order you come back tomorrow to have your change (hopping that you buy something else tomorrow for instance). Would you buy anything there any more? Once you've got your change would you ever come back to that shop?
So would all the MTGox customers right now. And if MTGox doesn't change their policy they will go on losing their customers in the same way and their business will die.

Thanks Mr.TheJoint :)
I think you are making some false assumptions here.  Seems GOX has a pretty high level of operational latitude here.  Going on the stated circumstances... So at some point they determined that there was a problem that required them to hault withdrawals.  Reportedly there are withdrawal orders that were placed at this time that have not yet been fulfilled.  Seems right. Sure. I would expect as much.

So they're basically just late on fullfilling those. Under the claimed circumstances I don't know that has any other impact or implications on the situation legal or otherwise.  I think they have the right to take the time they need to solve the problem without additional cost to them.  Don't they?  So:
- it's possible they will actually fulfill said withdrawals first prior to newer withdrawal orders.
- it also seems possible that, under the circumstances they could void withdrawal orders that occurred at that time, claiming that they were part of the problem, and under newly set withdrawal limits, ask those people to kindly reorder their withdrawals.

Either way, I'm not sure why any of that would make my originally posted theory impossible. My scenario could still play out.

Well sure.  But limits like these are not exactly new to exchanges.  I agree it would be peachy if the world was totally unlimited. But nobody in this world operates like that. The fiat world is ALL about those kind of limitations.  A run on a fiat bank is only a problem to the consumer because, literally, they don't have that kind of money in their vaults to give out all at once.  It's a system build on deception.  Now it's possible, but not likely, that bitcoin exchange houses are totally responsible and trustworthy and actually have the BTC and USD to back up all of their accounts.  In which case, they could afford, in the short term, to just let people withdraw unlimited amounts freely, because they'd make money on the transaction fees.  But then if all investors pulled completely out, there would be no longterm for them.  They'd be done, and when times are bad, I think it would be in their favor to implement any limitations that would slow the possibility of that worst case scenario. It's probably also good for consumers because I'd assume the faster the ship is sinking the more likely someone inside will be to hastily "off" with funds illegally.  Still, I agree with you, I believe when times are good the more freely people can access and exchange their funds the better off the exchange will be because it provides a better experience for the consumer.  Free market principles.

I understand that some people's view is that in a case of Gox's insolvency it is better to hold GoxFiat than to hold GoxBTC. But three times better? How exactly? This would imply the market sees the possibility that Gox actually is solvent as a very low-probability scenario.

Based on my limited understanding of how exchanges work and how much Gox has lost, I believe that even if they're a bit underwater, it's not nearly so much that it really matters. At these prices, if they allow BTC withdrawals, the inrush of cash will be more than enough to keep them solvent, and regain them at least a minute amount of trust so that not everyone withdraws everything at once.

They never had fast withdrawals. They are the only ones doing arbitrage with customers coins.

Imagine if they had coins stuck on another exchange that had withdrawals stuck. That would be LULz.

Removing the interloping verbage, you just said "The moment people realize they can successfully withdraw even a small amount [...] GOX will see healthy deposits."

What do you mean by "healthy" in this particularly bold assertion?

No. Simply, fully, completely, no. Gox has been circling the drain for the past year (https://bitcointalk.org/index.php?topic=173433.0), as anyone paying the slightest attention has long since noticed. No amount of taping things together, no quantities of gift-wrap, no battery-operated gimmicks, and no presumptuously worded apology will ever have the slightest chance of "recovering", because there's nothing there to recover. Incompetence is incompetence, and MtGox' has been amply demonstrated. There's no way around it.

Your proposal does nothing towards convincing MtGoxes corporate clients and big fish for trusting gox. The small limit withdrawal  might satisfy some small fish personal customers but I believe MtGox is not that interested in them and thinks corporate clients and big fish are where the money is. I believe in the past year or so MtGox has done exactly the opposite offering better service to big fish behind the curtains and letting little fish see all the problems at their worst and although little fish is treated like dirt there are hordes of other stupid new little fish pushing their money towards MtGox. So MtGox sees that hurting the little fish is not that bad. Your suggestion is another clue to the same effect. Little fish is happy when treated like dirt. The corporate clients do not take crap from MtGox. They leave.

Until someone can find proof that Gox actually lost a substantial amount of BTC in this whole debacle I personally see the 2011 database intrusion as more severe for their customers tbh. The biggest hit by far they have taken as a business was the loss of access to the US banking system, that in the end is more likely to kill them than the current state of affairs.

The amount of bs fud based on nothing but paranoid speculation that has been spread during the last week is astonishing, but it makes for fun reading. But hopefully Gox starts descending into obscurity after all of this has been cleared, Gox crashing the price every 3-4 months due to their problems is getting quite old.

1 They are not MtGox members..they are customers
2 Its not his fucking money to give in the first place..its your money ralph
3 GOX==BFL

Why are you asking us to prove a negative? Haven't you heard before that "money taks, b*llshit walks?"

The markets have spoken. Mt. Gox funds are selling at a significant anti-premium. Also, anytime a company announces these 3 bombshell words "we are temporarily limiting withdrawals" those are the most alarming glaring admission of illiquidity.

https://en.wikipedia.org/wiki/Efficient-market_hypothesis

If you want to disagree with EMH, and agree with mtgox's PR-approved choice of carefully crafted words, then I've got some magic beansprouts for sale. PM me for the sales pitch & how to send payment.

What's my false assumption?  The 68,000 BTC owed to customers was a figure put out by media outlets.

What do you mean this doesn't have an impact?  This is the primary reason that withdrawals are halted.  Gox didn't halt withdrawals because they have a "right" to do so, but rather because playing catch-up is, at present, an impossibility.

Your proposal is impossible (well, absurdly unrealistic) because you're making the false assumption that trading will accelerate when withdrawals come back online, but you're not accounting for the fact that withdrawals can't resume if there is nothing to withdraw, and Gox won't see either increased deposits or accelerated trading if people know that nothing comes out the other side.

Edit: When you're ready, I've got my BTC address waiting.

I believe the 68kBTC figure to be in the right ballpark. They also owe their customers a few dozen million USD worth of fiat.

There is absolutely no evidence that they'd have lost more than the seized fiat ($11 million) and a few kBTC. They have easily made enough profit over the years to cover those losses, even accounting for their personnel, legal and misc. costs.

68k BTC should be peanuts for Gox: http://www.reddit.com/r/BitcoinMarkets/comments/1y2qg8/mtgox_has_taken_275081_btc_and_17734275_usd_in/

Unsubstantiated bullshit is just that, bullshit until proven otherwise.


Yes they should just have left withdraws wide open to be exploited rather than fixing their broken shit, gotcha!

Their error was to not disable them sooner and when they finally DO disable them after weeks of issues and people complaining, everyone panics and declares the sky is falling ::)

I meant the precise wording--not the message itself. Whenever a company such as mtgox hires a pr firm to craft their official statement (when the pr firm has far less technical knowledge than a average bittalk user) it means they're doing damage control & trying to not trigger a panic, which that youtube video should have worried the ever ilving s**t out of anyone with life-changing btc deposited into their control.

I read the whole pirateat40 thread from page 1 to infinite. I myself have ran up free deposits up to large dollar amounts on probably 30-50 poker sites. Official spokesmen and official statements are always way more meticulously crafted if the seriousness of the problem is vast. Hope that clarifies what I could have articulated more clearly the first time.

Hey look!  My theory is already beginning.  ...Even BTCEFORE withrawals have become active again:

http://www.reddit.com/r/Bitcoin/comments/1yh9mr/are_your_usds_stuck_on_mtgox_congratulations/ (http://www.reddit.com/r/Bitcoin/comments/1yh9mr/are_your_usds_stuck_on_mtgox_congratulations/)

 ;)

I wonder who's buying all those "GoxBTCs", and how they intend to collect. Since what they're doing is buying bad debt, it's likely that some buyers are collection agencies or law firms, confident that they can force Mt. Gox to pay up. Collection agencies routinely buy up bad debts of companies. The companies then get very unpleasant visits from lawyers, goons, and cops until they pay up.

maybe gox themselves are buying gox btc..

I think most of us are wondering who is selling BTC <100e a coin....
It's kinda risky to buy cause indeed there's a chance you never see them again, but balance this with the fact you'd be selling them on any other marketplace x4, x5.
Also you need to note BTC withdrawals are halted, but arent $ or € not close to "locked inside Gox" too ? And probably not getting them back as well as your coins if MtGox dies.

As long as i'm maybe not having fiat nor BTC if Gox dies, I'd prefer collect cheap coin i could possibly sell higher later if/when BTC gates will open. Thats why lots of people are cancelling withdrawals (which are sooo long to get if you get them).

imo buyers are : people expecting Gox wont die (not in current months), people balancing risk of collapsing and selling cheap coin anywhere else ( and MtGox itself ?...)

So I'd like to know who you think is selling coins they all obviosly bought more than 100$/btc and loosing money (commited).
I'm very interested in know your point of view about this, but my guess is selling people are : investissors who are ok losing half money they put in btc but not losing all, people who are not losing money even @100e/btc (thiefs, silkroad guys etc.), scared people because of all the FUD everywhere plus large guys selling lots of BTC to make price fall a lot and create this panic to buy more goxBTC.

Poor thing, mommy and daddy did not give you enough attention?

Sure, but a new CEO would suffice to reestablish trust.